NEW DELHI – India’s cash-strapped Lakshmi Vilas Bank (LVB) will be merged with the Indian subsidiary of Singapore’s DBS Bank.
LVB’s financial position has undergone a steady decline, with the lender incurring continuous losses over the last three years, said the Reserve Bank of India (RBI) yesterday.
RBI has proposed the bank’s merger with DBS Bank India Ltd (DBIL).
Although DBIL is well capitalised, it will bring in an additional capital of 25 billion rupees (US$335 million, or RM1.37 billion) upfront to support the credit growth of the merged entity, said the central bank.
The Chennai-headquartered Lakshmi Vilas Bank lacks any viable strategic plan amid mounting bad loans, said RBI, while placing it under moratorium for 30 days.
“The bank has not been able to raise adequate capital to address issues around its negative net worth and continuing losses. Further, the bank is also experiencing the continuous withdrawal of deposits and low levels of liquidity.”
LVB operated 563 branches and 974 ATMs across India as of end-September, according to its website. – Bernama, November 18, 2020
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